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Tough Times for Microsoft?

Will the EU anti-trust ruling against Microsoft change the way the software giant conducts its business?

March 24, 2004

Will the EU anti-trust ruling against Microsoft change the way the software giant conducts its business?

The EU is expected to fine Microsoft a record $600 million for breaching antitrust rules. More seriously, the EU wants Microsoft to make changes to its windows operating system to enhance competition. Opinions are split on whether the EU Commission is doing the right thing — or whether it is just trying to hobble a succesful U.S. company. Our Read My Lips feature examines the issue.

How does Microsoft relate to politics?

"I’m sorry that we have to have a Washington presence. We thrived during our first 16 years without any of this. I never made a political visit to Washington — and we had no people here. It wasn’t on our radar screen. We were just making great software."
(Bill Gates, Microsoft chairman, December 1995)

Has Bill Gates turned into a robber baron?

“Bill Gates's appetite for monopoly profit matches that of the oil and railroad trusts, circa 1900.”
(Sebastian Mallaby, Washington Post columnist, June 2002)

What is the mood inside Microsoft?

“There is less passion and enthusiasm for technology — and greater focus on doing more for less.”
(Steve Ballmer, CEO of Microsoft, June 2003)

Why is Microsoft so focused on its bundling strategy?

“For Microsoft, this is a religious issue. Otherwise, they won’t be able to add things to the operating system. It’s like a being an automobile manufacturer — and not being able to add a radio to a new car.”
(Rick Sherlund, Goldman Sachs analyst, March 2004)

What are the key operating principles in light of increasing criticism?

“When we face a choice between adding features and resolving security issues, we need to choose security.”
(Bill Gates, Microsoft chairman, January 2002)

How did the U.S. antitrust proceedings against Microsoft end after years of negotiating?

“They’ve gone from breakup to suck-up.”
(Scott McNealy, chief executive of Sun Microsystems, November 2001)

What is different this time about Microsoft’s dealings with the EU Commission?

“In the past, Microsoft has always gone down to the wire — and then done a deal.”
(Mike Pullen, European competition expert, March 2004)

How could continued antitrust proceedings change Microsoft as a company?

“Eventually, they will have more lawyers than programmers.”
(Michael Cusumano, MIT management professor, March 2004)

Should Microsoft be surprised about the EU's ruling?

“A small company could claim it didn’t know the rules — but not one the size of Microsoft.”
(Amelia Torres, spokeswoman for the EU Competition Commissioner Mario Monti, March 2004)

Why such a huge fine?

“The public and competition would be better served by a decision setting a strong legal precedent which establishes clear principles for a company that is so dominant in the market.”
(EU Competition Commissioner Mario Monti, March 2004)

Will Microsoft suffer from the $600 million fine?

"This is a traffic ticket for Microsoft.”
(Thomas Vinje, lawyer with Clifford Chance, March 2004)

How large are Microsoft's cash reserves?

“With over $40 billion in cash and investments, Microsoft is becoming more and more like a bank.”
(Bill Parish, accountant, April 2003)

Why is Microsoft a unique company?

“Few big corporations are like Microsoft, with its uncanny ability to turn on a dime when it realizes it is being overtaken by changes in the market.”
(John Gapper, Financial Times columnist, October 2003)

What is the key insight that Microsoft's top managers are drawing from the antitrust proceedings?

“It doesn’t matter how we may have seen ourselves, we have to see ourselves as others see us. That, by far, is the biggest lesson.”
(Steve Ballmer, CEO of Microsoft, March 2004)

Is microsoft threatened by government intervention?

“The risk is that Microsoft is becoming the functional equivalent of an old-style utility, with extensive government regulation that could even extend to determining what products it sells — and at what prices.”
(Floyd Norris, New York Times columnist, March 2004)

And finally, is this spelling the end of Microsoft as we know it?

“There are at least three generations of analysts who have gone to their graves predicting the end of Microsoft’s monopoly.”
(Paul Saffo, director of the Institute for the Future, November 2002)